•~nec

PROCURE. MANAGE. DELIVER.

Using the ECC: the contract strategy

W h e n to use t h e ECC

Used by a Client to engage a first tier Supplier

2 To undertake any type of engineering and construction work

3 That requires sophisticated management techniques

4 Any level of design responsibility between the Client and Contractor

5 Drafted to be used in any country

Typical Client designed arrangement
Project Manager Adjudicator
Client
PSC o r PSSC DRSC

Designer
PSC o r PSSC

Contractor

Supervisor
PSC o r PSSC

Subcontractor Supplier
ECS o r ECSS SC o r SSC
Typical design & build arrangement
Project Manager Adjudicator
Client
PSC o r PSSC DRSC

Supervisor Contractor
PSC o r PSSC

Subcontractor Designer Supplier

ECS o r ECSS PSS o r PSSC .C o r SSC
When to use the short form?
Engineering and Construction Short Contract (ECSC) is for use with contracts which

• d o not require sophisticated management techniques and

• comprise straightforward work and

• impose only low risks o n both the Client and the Contractor

Not necessarily low Not necessarily

financial value short duration
When to use the short form? Differences

--~nec4 ■ Only price based - equivalent to ECC Option A and B

■ No options - but includes

engineering and construction
short contract
• X18 - limitation of liability, in part

• Y(UK)2 - Housing Grants, Construction & Regeneration

Act 1996

■ Most of the procedures, but less of the detail

■ Fewer compensation events

■ Contractor assesses amount due and notifies all

compensation events
201?
The Engineering and Construction Subcontract (ECS)

•~~nec4 ■ ECS is designed to be a back-to-back contract with ECC

■ ECC Client, Project Manager and Supervisor all become ECS

engineering and Contractor
construction subcontract

■ ECC Contractor becomes ECS Subcontractor

■ Certain timescales are changed, for example for

communication and payment

■ More detail on the ECS in Volume 2 and 4 of the ECC User

Guides

■ Engineering and Construction Short Subcontract works in

the same manner with the Engineering and Construction
Contract
June 2017
ECC people
People in contract, defined by their role.

These two are the

Parties to the contract

or
Dispute Avoidance
k Board 1

Others (e.g. designers,

Supervisor
fl
Contractor statutory authorities) r
fl F
1

fl ■ fl
fl I fl
Adjudicator
fl Project Manager fl
fl or fl
fl Dispute Avoidance*r
7
1 L Board
The ECC structure

The ECC structure is ALWAYS have the Choose ONE main Option clause (A
modular in form with core clauses to F) which decides the mechanism
5 modules, normally for payment and t h e relevant
chosen by the Client schedule of cost components

Choose ONE dispute Choose as many secondary Add any additional

resolution Option Option clauses as required clauses (prefixed Z)
clauses (W1, W2 or W3) (prefixed X or Y)
Core clauses
1 General

2 The Con tractor 's main responsibilities

3 Time

4 Quality management

5 Payment

6 Compensation events

7 Title

8 Liabilities and insurance

9 Termination
Main Option Clauses

A Priced contract with activity schedule

Priced contract with bill of quantities

Target contract with activity schedule

D Target contract with bill of quantities

E Cost reimbursable contract

Management contract
Activity Schedule (Option A)
Lump sum contract

Project well defined at tender

I

Activities usually defined by Contractor

Activities priced by Contractor r

l\ %Mt

---------1 ------------- —

Payment on completion of defined activities

I-

Milestone payments by grouping activities

Activity Schedule can be adjusted by Contractors reflect Scope

Bill of Quantities (Option B)

Contractor prices
Project well defined
Standard method o f items in Bill of
a t tender b u t
measurement used Quantities at
change likely
tender stage

Contractor paid Original work is re

for quantity of measured (but not
work completed necessarily changed)
Target contracts (Options C & D)

Click each number to reveal

Contractor \s paid or pays

a share of the difference
between total costs and
final target, at the end of
the contract
Target contracts (Options C & D)

Click each number to reveal

Work must be adequately

defined
to establish target
Target contracts (Options C & D)

Click each number to reveal

Target price set by activity

schedule (C) or bill of
quantities (D) which
Contractor prices at
tender
Target contracts (Options C & D)

Click each number to reveal

Contractor tenders Fee

Target contracts (Options C & D)

Click each number to reveal

Con tractor gets paid

forecast Defined Cost
+ Fee
Target contracts (Options C & D)

Click each number to reveal

Target moves with

compensation events
(Options C & D)
and remeasurement
(Option D)
Target contracts (Options C & D)

Click each number to reveal

Contractor is paid or pays

a share of the difference
between total costs and
final target, at the end of
the contract
Cost reimbursable contract (Option E)

Used for example for Contractor Contractor paid Contractor has n o

emergency, tenders Fee forecast Defined financial risk (except
experimental, research Cost + Fee adequacy of Fee)
work where
• work poorly defined
at tender
• work subject to
extensive change
Management contract (Option F)
Click on each icon to learn more

Contractor generally Most work Contractor tenders Contractor Contractor has limited
organises work only carried out by pr/ces (lump sum) gets paid financial risk, except
Subcontractors and Fee forecast for adequacy of
Defined Cost • Fee and
+ Fee • prices for work it
does itself
Financial risk of main Options
lient

Depends o n
pain/gain
mechanism

Contractor
Dispute resolution clauses

for adjudication, where the HGCR Act 1996

W1 does not apply

W2 for adjudication, where the HGCR Act 1996 applies

where a Dispute Avoidance Board is used

Secondary Option clauses
Click each number to reveal

X1 - Price adjustment for

inflation
Secondary Option clauses
Click each number to reveal

X2 - Changes in the law

Secondary Option clauses
Click each number to reveal

X3 - Multiple currencies
Secondary Option clauses
Click each number to reveal

X4 - Ultimate holding
company guarantee
Secondary Option clauses
Click each number to reveal

X5 - Sectional Completion
Secondary Option clauses
Click each number to reveal

X6 - Bonus for early

Completion
Secondary Option clauses
Click each number to reveal

X7 - Delay damages
Secondary Option clauses
Click each number to reveal

X8 - Undertakings to the
Client or Others
Secondary Option clauses
Click each number to reveal

X9 - Transfer of rights
Secondary Option clauses
Click each number to reveal

X10 - Information modelling

Secondary Option clauses
Click each number to reveal

X11 - Termination by the

Client
Secondary Option clauses
Click each number to reveal

X12 - Multiparty collaboration

Secondary Option clauses
Click each number to reveal

X13 - Performance bond

Secondary Option clauses
Click each number to reveal

X14 - Advanced payment to

the Contractor
Secondary Option clauses
Click each number to reveal

X1 5 - The Contractor's design

Secondary Option clauses
Click each number to reveal

X16 - Retention
Secondary Option clauses
Click each number to reveal

X17 - Low performance

damages
Secondary Option clauses
Click each number to reveal

X18 - Limitation of liability

Secondary Option clauses
Click each number to reveal

X20 - Key performance

indicators
Secondary Option clauses
Click each number to reveal

X21 - Whole life cost

Secondary Option clauses
Click each number to reveal

X22 - Early Contractor

involvement
Secondary Option clauses
Click each number to reveal

Y(UK)1 Project Bank Account

Y(UK)2 The Housing Grants, Construction and Regeneration Act 1996

Y(UK)3 The Contracts (Rights of Third Parties) Act 1999

Z Additional conditions of contract

 Contract documents

Contract Data parts one (Client) Scope Prices Site Information

and two (Contractor) • specifies and describes • depends on main • describes the Site
• details specifics - see template the works Option chosen - and its surroundings
Contract Data included in • states any constraints include activity
delegate packs o n how Contractor schedule or bill of
• the specific details for the Provides the Works quantities
contract blank forms can be • mainly specification
and drawings
found at the back of the
• supplied by Client or
contract itself
Contractor (for design)
Other documents

With Contract Data

• If Option X12 is chosen - Partnering Information
• If Option X20 is chosen - incentive schedule

In Scope
• if Option X4 is chosen - ultimate holding company guarantee
• if Option X8 is chosen - undertakings to the Client or Others
• if Option X1 3 is used - performance bond